The Alberta Court of Appeal addressed the effect of without prejudice offers in Mahe v. Boulianne. In Mahe, the Alberta Court of Queen’s Bench awarded the plaintiff $700,000 at trial for injuries sustained when he fell from a power pole. On appeal, damages were reduced to $365,000. After the trial judgment was rendered, the appellant offered the plaintiff $500,000, being the appellant’s insurance policy limit. The plaintiff rejected the offer. The appellant sought double costs from the date of the offer.

The plaintiff argued that the offer does not attract double costs as it did not make reference to the Rules of Court dealing with formal offers, nor did it indicate that it was made as a Calderbank offer. It was simply a settlement offer made on a “without prejudice” basis.

The Alberta Court of Appeal held that “without prejudice” offers can be referred to when the merits of the dispute have been decided. At para. 10, the Court stated that:

…The Rules of Court do not specify that any particular form of offer is required to trigger its costs consequences, and an offer need not make reference to costs. The parties are presumed to know the law, including the provisions of the Rules of Court. In any event, even informal offers that arguably do not comply with the Rules can have an effect on costs: Fullowka v. Royal Oak Ventures Inc., 2008 NWTCA 9 (CanLII), 2008 NWTCA 9, [2008] 12 W.W.R. 60, 437 A.R. 390 at paras. 23-5. While informal offers do not restrict the court’s discretion over costs, they are nevertheless a relevant consideration. The appellant made a generous offer that exceeded his eventual liability, and he is entitled to double costs of the appeal after the offer was made.

This decision stresses the importance of explaining to clients the risks and benefits associated with offers, whether they are formal offers under the Rules of Court or informal offers made on a without prejudice basis. This decision further stresses the wide discretion exercised by the court in awarding costs. Finally, this decision confirms that all settlement offers may be considered by a court in assessing costs.